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Old 06-20-2012, 07:14 AM   #1
crowe
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Default Offers at MSRP from Dealers

In the last few weeks we’ve had several dealers & locators offer to buy new KIA inventory at MSRP. The short run profit is temping but what would be our next trick since allocation is turn & earn based or at least supposedly.

I assume the other dealers are making the offers because they think they can get more inventory if they increase their sales. Surely it isn’t the objective money, it’s only $400 per unit. Who knows maybe they’re out of inventory or think they can collect a 2-3k addendum.

Our earned allocation has been much less than our turned sales for a long time. But at least we are getting some inventory. I can envision small dealers that don’t sell their market share catching the screws down the road.

KIA has been running a twenty something day supply for more than a year & continues to open new dealers even though they can’t sufficiently supply existing dealers.

Although KIA has been increasing sales for a long tome if you look at the last couple of months their sales are flat. I see a supply line stretched to the limit.

Anytime the car business is doing really good you can count on the manufacture doing something to screw it up.
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Old 06-20-2012, 06:00 PM   #2
XDCX
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Great post - thanks for sharing the information.

For a KIA dealer who's short on inventory I can see why they'd be willing to pay MSRP to get a unit they know they're going to retail. Even if they make nothing on the front end they still have a chance to make something in F&I and maybe they'll get a decent trade-in too.

As you mentioned, the bigger benefit would be an increase in future allocations since their sales have increased and their inventory has remained the same.

I remember back when the Ram Truck and Jeep Grand Cherokee were Red Hot dealers were also willing to pay up to MSRP to get additional inventory. There used to be classified ads in Automotive News where dealers were looking for additional inventory with clean NVDRs.
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Old 06-21-2012, 07:00 AM   #3
rd3311
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Quote:
if you look at the last couple of months their sales are flat. I see a supply line stretched to the limit.
Kia has practically no inventory on the ground nationally.

Closed sale program cars (CPO) is where the opportunity is right now.
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